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Detroit’s Packard Plant owner in his own words: ‘Sorry, I’m not a millionaire’ and ‘I still have very big debts’

The Packard Plant

The Packard Plant is s a 3,500,000-square-foot factory complex on Detroit's east side built by Albert Kahn in 1903. The factory closed in 1958 and all uses stopped in the late 1990s. Tanya Moutzalias | MLive.com)

“So I still have to recognize ... I owe the Peruvians close to $40 million, because everything was on credit, no? So sorry, I’m not a millionaire.”

DETROIT, MI – The scene is a gaudy palace in Spain, decked out with Ferraris and all the luxury items.

Fernando Palazuelo, who owns the crumbling and blighted 3.5-million-square-foot Packard Plant, described the setting as his home, his Iberian lifestyle. He accumulated the wealth after successfully developing parts of Madrid, Barcelona and Palma de Mallorca.

He found his success in buying up property in depressed areas, renting tenements to artists, who would then add vibrancy – and value – to his real estate assets.

Flash forward to the global recession of 2007 and 2008, when he lost it all. Literally. The Spanish developer told a crowd gathered at Rossetti Architects’ rooftop patio in downtown Detroit Wednesday that at age 52, he was broke. He was forced to move his wife and four kids to Lima, Peru, which by his description still had all of its money in the suburbs, people didn’t go downtown. It was similar to Detroit, he said.

Everyone runs aground at some point, so maybe for Palazuelo – who by his own words was living in a downtown apartment where he and his family had to share the bathroom with 15 other people including “druggers” - was just a hiccup for an otherwise shrewd businessman getting back on his feet.

“I am not superman,” he told the audience Wednesday. “I am sorry for disappointing you. I have had certain successes and one failure.”

Palazuelo also apologized for his broken English before speaking, so perhaps some things were being lost in translation. But considering this was the man who had successfully nabbed Detroit’s foremost piece of blight, and the event hosts even named a cocktail after him - the Packard Paloma* - the tone rang somewhat strange.

The way Palazuelo said he got back on his feet was a bit weird too, considering the day’s circumstances: the Wayne County Treasurer’s office confirmed Wednesday Palazuelo is delinquent on some $90,000 in taxes for the 40-acre Packard Plant property.

Palazuelo said he has been speaking with the Detroit Symphony Orchestra about hosting at the Packard Plant. He said he has been particularly impressed with the DSO's take on Russian 19th century composer Pyotr Ilyich Tchaikovsky.David Muller

Anyhow, after wandering downtown Lima and admiring some of its 16th Century grandeur, and still presumably broke, Palazuelo targeted some buildings that were empty but oozing with character for redevelopment. This was just six years ago.

“I convinced them to sell me 22 buildings, without putting one dollar spent,” Palazuelo said of his purchases in Peru. “I was able to seduce them, because Peruvians - they are very serious,” he added to some laughter at the downtown Detroit event.

“So I was able to buy 22 buildings more or less downtown (Lima) and in six years paid them what we agreed to pay,” he added. “Paid them, convert them, bring international banks and serious companies, companies from all over the world, and bring 15,000 jobs.”

It sounded like the kind of success story Detroit could get behind.

Palazuelo then added, “So I still have to recognize, unfortunately, I owe the Peruvians close to $40 million, because everything was on credit, no? So sorry, I’m not a millionaire.”

“I still have very big debts,” he continued. “But for the moment, I am able to pay them. Monthly.”

It was a bizarre way to address a crowd that had welcomed the developer as its honored guest, but again, English is not Palazuelo’s mother tongue.

Not that anyone expects normalcy when it comes to the Packard Plant as of late anyway. The original winning bidder of the 42-parcel site in last October’s auction was a Texas doctor who up-bid the crumbling wastleland on the city’s east side to $6.038 million.

Reporters scrambled to get in touch with Jill Van Horn, of Ennis, Texas, before she had a spokesman release a rambling statement saying that the Packard Plant would be redeveloped into a modular home factory that would save Detroit.

She never wired the county any money.

The property was then offered to the second bidder, Bill Hults, an Illinois developer who had originally planned to turn the Packard Plant into a mixed-use development and entertainment complex before the county put the property on the tax foreclosure auction block.

Hults told the county in September that he and a group of investors planned to buy the property for the roughly $1 million in back taxes owed before it went to auction.

Hults then missed several deadlines for payments on the property, so the county offered it to Palazuelo for just $405,000, or a little less than 12 cents per square foot.

The county confirmed payment from Palazuelo in January.

Palazuelo told reporters at Wednesday’s event that his lawyers are sorting out the delinquent tax issue.

“I’m sure they will get the money and agreement and this will be paid in the next week,” Palazuelo said. “I don’t know exactly. This is something I’m not taking care of. My lawyers are taking care of this.”

Palazuelo also said that plans are moving forward to redevelop the decrepit site, which has been abandoned and left to scrappers and urban explorers since the 1990s. The Packard Motor Car Company manufactured luxury vehicles there until 1958.

“This is going to be in the hands of the market,” Palazuelo told reporters before speaking at the event. ”If the market reacts positive, we will do it in 5-7 years. If the market does not understand our proposal, it will take more than 10 years.”

The proposal remains fairly vague. Palazuelo said Wednesday he wants to have “7-8 different tenants” at the site, with “young people, artists, school, everything fits together. Not only one tenant.” He said that automotive suppliers are still the primary target for leasing up space there, though.

He said his team of developers from Lima-based Arte Express plan to continue securing the site and hope to have an office at the former automobile plant's headquarters building before next winter. He said new signage should show up on the site as early as Monday, or at least before the end of the month.

In the meantime, Palazuelo said he has also been speaking with the Detroit Symphony Orchestra about hosting a show there, possibly in the fall. He said he has been particularly impressed with the DSO’s take on Russian 19th century composer Pyotr Ilyich Tchaikovsky.

“In the end, this is art, this is history," Palazuelo said. "It’s real contrast to have classical music, Tchaikovsky, in the buildings with fire, with asbestos. To have something so sophisticated inside of so many buildings that look aggressive is something that by the end has to do with art.”